Sunshine Laws Stump Compliance Departments

The federal Physician Payment Sunshine Act. State disclosure laws in Vermont and Massachusetts. More disclosure laws in possibly dozens of other states in the near future. It’s enough to make a compliance department throw up its hands and leave the hassle to a third party—which is exactly what many pharma companies are doing now or plan to do in the future, according to a new study conducted by Cegedim Dendrite.

The respondents—56 professionals working in the compliance departments at their respective pharma/biotech/medical device companies—expect that the farming out of this data collection will increase the cost of aggregate spend reporting and compliance over the next year. But most have little choice, as this wave of legislation seems to have caught them with their pants down.

Cegedim Dendrite’s VP and general manager of Compliance Solutions and OneKey, Bill Buzzeo, said the situation is a bit more complicated, though. “Pharma companies want to do the right thing,” Buzzeo said. “Compliance is always at the top of every CEO’s mind. But at the same time, they have to weigh cost versus risk.”

The costs, in this case, generally didn’t outweigh the risk until a couple months ago, when Congress finally passed its healthcare reform bill. Attached to that bill was the Physician Payment Sunshine Act, which comes with even higher monetary penalties than current state disclosure regulations.

The industry foresees an average revenue decrease of 3 percent in the US in 2010. That future decrease is projected to come mostly from higher Medicaid rebates, but third party compliance analysis will certainly contribute to a declining bottom line.

The study was conducted just before the passage of the healthcare bill, but even with such a game changer on the horizon, just 29 percent of respondents said they’re “very confident” that their company is fully compliant with current disclosure regulations. Buzzeo said the compliance departments are unsure because of accuracy concerns. “They’re asking themselves, ‘Do we have all the data? Do we have it correct? Do we have all the right processes and procedures to make sure everything is accurate?’” he said.

Most of the study participants attributed any lack of compliance to (among other reasons) bad recordkeeping and a lack of understanding of policy.

“The way the rules and laws are written, it’s not just about a rep giving out a pen and finding out the fair market value of the pen,” Buzzeo said. “This legislation typically goes beyond that.”

Honorariums and consultation fees for physicians, sending healthcare professionals to domestic and international conferences—these costs all come in through different channels, and compliance officers are finding it difficult to tie the disparate strings.

“It’s like taking all this spaghetti and making it one noodle,” Buzzeo said. “It’s not as easy a problem to solve as you might think.”